Rents soar as apartment vacancies in metro Denver near all-time low

A no vacancy sign is displayed outside of an apartment building on Pearl Street in Capitol Hill. Vacancies in Denver are at near all-time low. (The Denver Post file)

Metro Denver apartment vacancies dropped to 3.9 percent in the third quarter, the second lowest recorded rate.

Finding a place to lease was only tougher during the third quarter of 2000, when the information-technology boom made Denver one of the top places to live in the U.S. and the vacancy rate dropped to 3.7 percent, said Patty Silverstein, chief economist for the Metro Denver Economic Development Corp.

"It's a near historic low ," she said. "You are going to start seeing a continual escalation of rental rates. You definitely will have to pay a little bit more to get that same apartment."

Rents averaged $762 in the second quarter of 2000, compared with $1,145 during the third quarter of 2014, and up from $1,117 in the second quarter and $1,073 in the first, according to figures released Friday in the Denver Metro Area Apartment Vacancy and Rent Survey. The statistics were compiled by the University of Denver's Daniels College of Business and Colorado Economic and Management Associates.

Silverstein said the drop to 3.9 percent from 4.7 percent in the second quarter was surprising because of the number of new apartments being built. She said 9,145 new apartments were built in 2013, 8,700 new apartments are expected to come online in 2014 and another 8,700 in 2015.

"Even in the face of construction workforce shortages, apartment communities continue to sprout up across the metro area," said Mark Williams, executive director of the Apartment Association of Metro Denver. "However, it's still hard to keep up with demand, which is growing at least as quickly."

The report noted that more people are moving to Colorado than are leaving, with net in-migration projected at more than 55,000 next year, far above the historical annual net in-migration of 40,000.

"You just look at the lease-up that is going on, it is just phenomenal," report co-author Ron Throupe said. "Denver is becoming one of the major cities. It is no longer secondary."

Rapidly rising home prices have pushed potential buyers out of the market and into rentals, Silverstein said. But she said said people with professional aspirations also are flooding the market.

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Rents soar as apartment vacancies in metro Denver near all-time low